Thursday, July 30, 2009

Class Action Junk

So now the class action lawsuits that only succeed in winning money for the lawyers representing the class have gone commercial.

You've no doubt received letters in the mail saying that you are a member of a class action suit, that a tentative settlement has been reached and that unless you do something, the whole thing will be settled and you will receive your compensation which is always a minuscule amount. As an example, my wife and I received such a letter because we had bought some "dot.com" stocks back in boom days and that the stocks had been overhyped by analysts and therefore we paid too much. As compensation, we were going to receive $0.002 per share. The ridiculous part of this is that if stock were overhyped, it was certainly by more than $0.002 per share. The shameful part of this is that the lawyers involved are receiving millions. This is not speculation; it is clearly stated in the letter that they will receive millions. We've also had similar cases for computer monitors and software and baby formula and ... and I can't remember all the cases. But it's been with consumers as the class.

Until now. A full page ad in Plastics News (summarized in Plastics Today) tells of the settlement in a class action suit against four PMMA manufacturers. The manufacturers have agreed to put ~ $15,000,000 in a pot to be divied up by anyone who bought PMMA from the defendants over a 9 year period.

So let's speculate here. $15 million divided by the hundreds of millions of pounds produced annually times the numbers of years means that you will get millipennies per pound. Unless you nearly cornered the market on PMMA, you'll be lucky to get a check with more than 3 digits on it.

If there really was antitrust collusion here, the defendants were horrible at it if they only have $15 million in gains over 9 years to show for it. I just see this suit as another way for attorneys to get rich while claiming to defend a higher cause.